NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2021 and 2020
NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS
Grey Cloak Tech Inc. (the “Company”)
was incorporated in the State of Nevada on December 19, 2014. The Company has additionally acquired BergaMet NA, LLC and Ultimate
Brian Nutrients, LLC which markets and sells heath supplemental products. On October 23, 2020, we changed our name from Grey Cloak
Tech Inc. to Healthy Extracts Inc. to more accurately reflect our business. We are currently waiting for The Financial Industry
Regulatory Authority (FINRA) to issue our Company a new ticker symbol before we file our 8-K for this change.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Basis of Presentation
The accompanying unaudited consolidated
financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America
for interim financial statements and with the instructions to Form 10-Q and Article 8 of Regulation S-X of the United States Securities
and Exchange Commission (“SEC”). Accordingly, they do not contain all information and footnotes required by accounting
principles generally accepted in the United States of America for annual financial statements. In the opinion of the Company’s
management, the accompanying unaudited consolidated financial statements contain all the adjustments necessary (consisting only
of normal recurring accruals) to present the financial position of the Company as of March 31, 2021 and the results of operations
and cash flows for the periods presented. The results of operations for the year ended March 31, 2021 are not necessarily indicative
of the operating results for the full fiscal year or any future period. These unaudited consolidated financial statements should
be read in conjunction with the financial statements and related notes thereto included in the Company’s form 10-K for the year ended December 31, 2020 filed with the SEC on February
19, 2021.
Use of Estimates
The preparation of financial statements
in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues
and expenses during the reporting period. Actual results could differ from those estimates.
Cash
Cash includes cash in banks, money market
funds, and certificates of term deposits with maturities of less than three months from inception, which are readily convertible
to known amounts of cash and which, in the opinion of management, are subject to an insignificant risk of loss in value.
HEALTHY EXTRACTS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2021 and 2020
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Accounts Receivables
Accounts receivables are recorded at the
invoice amount and do not bear interest.
Inventory
Inventories consist of health supplements
held for sale in the ordinary course of business. The Company uses the weighted average cost method to value its inventories at
the lower of cost or market. An allowance for inventory was established in 2018 and is evaluated each quarter to determine if all
items are still sellable due to expiration dates. As of March 31, 2021 and 2020, the total of inventory which was written off as
an inventory allowance was $1,808,904 and $748,972.
Property and Equipment
The Company’s property and equipment
are recorded at cost and depreciated using the straight-line method over the useful lives of the assets, generally from three to
seven years. Upon sale or disposal of property and equipment, the related asset cost and accumulated depreciation or amortization
are removed from the respective accounts and any gain or loss is reflected in current operations.
Indefinite-Lived Intangible Assets
Indefinite-lived intangible assets established
in connection with business combinations consist of patents, trademarks, and trade names. The impairment test for identifiable
indefinite-lived intangible assets consists of a comparison of the estimated fair value of the intangible asset with its carrying
value. If the carrying value exceeds its fair value, an impairment loss is recognized in an amount equal to that excess.
As of March 31, 2021, the Company believes
that based upon qualitative factors, no impairment of indefinite-lived intangible assets is necessary.
Goodwill
In accordance with Goodwill and Other
Intangible Assets, goodwill is defined as the excess of the purchase price over the fair value assigned to individual assets acquired
and liabilities assumed and is tested for impairment at the reporting unit level on an annual basis in the Company's fourth fiscal
quarter or more frequently if indicators of impairment exist. The performance of the test involves a two-step process. The first
step of the impairment test involves comparing the fair value of the Company's reporting units with each respective reporting unit's
carrying amount, including goodwill. The fair value of reporting units is generally determined using the income approach. If the
carrying amount of a reporting unit exceeds the reporting unit's fair value, the second step of the goodwill impairment test is
performed to determine the amount of any impairment loss. The second step of the goodwill impairment test involves comparing the
implied fair value of the reporting unit's goodwill with the carrying amount of that goodwill. The Company sees the goodwill to
have a ten-year useful life. No goodwill impairment indicators were present, for the goodwill listed on the books as of March 31,
2021, after working through our analysis of goodwill during the year ending March 31, 2021.
HEALTHY EXTRACTS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2021 and 2020
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The Company has determined that the method
applied represents the fair value of the asset group principally because the valuation of the intangibles with the asset group
is based on the anticipated cash flows related to the revenue stream from its customers. The asset group excludes goodwill, long
term non-operational assets and liabilities and cash. As such, the principal value from the asset group relates to the cash inflows
from its customers and the cash outflows required to service these customers. The fair value for the asset group consists of the
following:
|
·
|
Fair value of net revenues:
computed using the income approach. The key input to these computations is the anticipated cash inflows from customers. These valuations
include 100% of the cash inflows related to the customer base, and taking cash outflows into consideration.
|
|
·
|
Fair value of working
capital (including accounts receivable, inventory, accrued expenses, and accounts payables). Due to the short-term nature of the
working capital, book value has been determined to be fair value. These accounts represent either avoided future outflows (inventory,
prepaids) or future cash flows (accrued expense, AP and AR) related to customer sales.
|
|
·
|
Fair value of five years
of revenue (2020 to 2024): we discounted our cash flows to the anticipated cash projected to be received. We also projected the
anticipated cash outflows required to service these customers. If the asset group was to be valued as a whole, we would expect
an income approach based on the revenues being generated from the customers and expenses required to service those customers, appropriately
adjusted for the working capital position. The sum of these values reasonably approximates this approach.
|
The Company’s revenue streams align
directly with the intangibles, which were recorded as a result of the BergaMet acquisition in fiscal 2019. For purposes of the
Step 2 recoverability test under ASC 360 subsection 2.3., the net revenues from BergaMet customers base were used. The revenue
stream fairly reflects anticipated future cash flows; accordingly, the intangibles associated with these revenue streams have been
tested with the expected cash flows.
Due to the purchase of Ultimate Brian
Nutrients, LLC being a related party transaction and the new division recording no revenue as of June 30, 2020, the Company found
the goodwill to be impaired. Due to the impairment the Company expensed the goodwill related to the purchase as of June 30, 2020.
Revenue Recognition
Beginning January 1, 2019, the Company
implemented ASC 606, Revenue from Contracts with Customers. Although the new revenue standard is expected to have an
immaterial impact, if any, on our ongoing net income, we did implement changes to our processes related to revenue recognition
and the control activities within them. These included the development of new policies based on the five-step model provided
in the new revenue standard, ongoing contract review requirements, and gathering of information provided for disclosures
The Company recognizes revenue and cost
of goods sold from product sales or services rendered when control of the promised goods are transferred to our clients in an amount
that reflects the consideration to which we expect to be entitled in exchange for those goods and services. To achieve this
core principle, we apply the following five steps: identify the contract with the client, identify the performance obligations
in the contract, determine the transaction price, allocate the transaction price to performance obligations in the contract and
recognize revenues when or as the Company satisfies a performance obligation.
The Company records revenue upon shipment
of the products to the customers.
HEALTHY EXTRACTS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2021 and 2020
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Concentration
There is no concentration
of revenue for the months ended March 31, 2020 and the months ended March 31, 2021 because the revenue was earned from multiple
customers.
Income Taxes
The Company accounts for income taxes
using the asset and liability method in accordance with ASC 740, “Accounting for Income Taxes”. The asset and liability
method provides that deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences
between the financial reporting and tax bases of assets and liabilities and for operating loss and tax credit carry forwards. Deferred
tax assets and liabilities are measured using the currently enacted tax rates and laws that will be in effect when the differences
are expected to reverse. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed
more likely than not to be realized. For the period ending March 31, 2020 and March 31, 2021, the Company did not have any amounts
recorded pertaining to uncertain tax positions.
Fair Value Measurements
The Company adopted the provisions of
ASC Topic 820, “Fair Value Measurements and Disclosures”, which defines fair value as used in numerous accounting
pronouncements, establishes a framework for measuring fair value and expands disclosure of fair value measurements.
The estimated fair value of certain financial
instruments, including cash and cash equivalents are carried at historical cost basis, which approximates their fair values because
of the short-term nature of these instruments.
ASC 820 defines fair value as the exchange
price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous
market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes
a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable
inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value:
Level 1 —
quoted prices in active markets for identical assets or liabilities
Level 2 —
quoted prices for similar assets and liabilities in active markets or inputs that are observable
Level 3 —
inputs that are unobservable (for example cash flow modeling inputs based on assumptions)
The derivative liability in connection
with the conversion feature of the convertible debt, classified as a Level 3 liability, is the only financial liability measure
at fair value on a recurring basis.
The change in Level 3 financial instrument
is as follows:
Balance, January 1, 2021
|
|
$
|
7,202
|
|
Issued during the year ended March 31, 2021
|
|
|
689,088
|
|
Change in fair value recognized in operations
|
|
|
1,692
|
|
Converted during the year ended March 31, 2021
|
|
|
0
|
|
Balance, March 31, 2021
|
|
$
|
697,982
|
|
HEALTHY EXTRACTS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2021 and 2020
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Recent Accounting Pronouncements
In May 2014, the Financial Accounting
Standards Board (“FASB”) issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). ASU 2014-09 amends
the guidance for revenue recognition to replace numerous, industry specific requirements and converges areas under this topic with
those of the International Financial Reporting Standards. The ASU implements of five–step process for customer contract revenue
recognition that focuses on transfer of control, as opposed to transfer of risk and rewards. The amendment also requires enhanced
disclosures regarding the nature, amount, timing and uncertainty of revenues and cash flows from contracts with customers. Other
major provisions include the capitalization and amortization of certain contract cost, ensuring the time value of money is considered
in the transaction price, and allowing estimates of variable consideration to be recognized before contingencies are resolved in
certain circumstances. The amendments in this ASU are effective for reporting period beginning after December 15, 2016, and early
adoption is prohibited. Entities can transition to the standard either retrospectively or as a cumulative-effect adjustment as
of the date of adoption.
The Company’s revenues are recognized
when control of the promised goods or services is transferred to our clients (upon shipment of goods) in an amount that reflects
the consideration to which we expect to be entitled in exchange for those goods and services. To achieve this core principle, we
apply the following five steps: (1) Identify the contract with a client; (2) Identify the performance obligations in the contract;
(3) Determine the transaction price; (4) Allocate the transaction price to performance obligations in the contract; and (5) Recognize
revenues when or as the Company satisfies a performance obligation.
We adopted ASC 2014-09 on January 1, 2019.
Although the new revenue standard is expected to have an immaterial impact, if any, on our ongoing net income, we did implement
changes to our processes related to revenue recognition and the control activities with them.
Convertible Instruments
The Company evaluates and account for
conversion options embedded in convertible instruments in accordance with ASC 815 “Derivatives and Hedging Activities”.
Applicable GAAP requires companies to
bifurcate conversion options from their host instruments and account for them as free-standing derivative financial instruments
according to certain criteria. The criteria include circumstances in which (a) the economic characteristics and risks of the embedded
derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the
hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value
under other GAAP with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms
as the embedded derivative instrument would be considered a derivative instrument.
The Company accounts for convertible instruments
(when it has been determined that the embedded conversion options should not be bifurcated from their host instruments) as follows:
The Company records when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt
instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note
transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over
the term of the related debt to their stated date of redemption.
The Company accounts for the conversion
of convertible debt when a conversion option has been bifurcated using the general extinguishment standards. The debt and equity
linked derivatives are removed at their carrying amounts and the shares issued are measured at their then-current fair value, with
any difference recorded as a gain or loss on extinguishment of the two separate accounting liabilities. During the months ended
March 31, 2021, the Company issued $340,000 of convertible debt with a bifurcated conversion option.
HEALTHY EXTRACTS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2021 and 2020
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Common Stock Purchase Warrants
The Company classifies as equity any contracts
that require physical settlement or net-share settlement or provide a choice of net-cash settlement or settlement in the Company’s
own shares (physical settlement or net-share settlement) provided that such contracts are indexed to our own stock as defined in
ASC 815-40 ("Contracts in Entity's Own Equity"). The Company classifies as assets or liabilities any contracts that require
net-cash settlement (including a requirement to net cash settle the contract if an event occurs and if that event is outside our
control) or give the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement).
The Company assesses classification of common stock purchase warrants and other free-standing derivatives at each reporting date
to determine whether a change in classification is required.
Gain on Extinguishment of debt
Note Satisfaction Agreements
Prior to the Exchange, the Company entered
into a Note Satisfaction Agreement with each of Auctus Fund, Crown Bridge Partners, LLC, Power Up Lending Group Ltd., GS Capital
Partners LLC, Oakmore Opportunity Fund I LP, and Adar Bays, LLC. All of these entities were holders of the Company’s convertible
debt, and these Note Satisfaction Agreements terminate their convertible notes unless the Company fails to perform its payment
obligations. The Company agreed to pay these note holders an aggregate of $520,658 plus interest. The Company paid an aggregate
of $353,908 on or before February 15, 2019. The balance owed and outstanding of $160,000 plus interest was agreed to be purchased
by some third-party individuals. During the third quarter 2020, these third-party individuals decided to convert the outstanding
notes into 2,400,000 shares of the Company’s common stock.
Various other holders of Convertible Promissory
Notes agreed to convert their notes for an aggregate of 806,015 shares of common stock prior to the Exchange. As a result of these
transactions, no convertible promissory notes remain outstanding, except for those convertible notes subject to revival if the
Company fails to make payments pursuant to the Note Satisfaction Agreements.
NOTE 3 – GOING CONCERN
The accompanying financial statements have
been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. The Company has generated minimal revenues from operations. Since
its inception, the Company has been engaged substantially in financing activities and developing its business plan and incurring
startup costs and expenses. As a result, the Company incurred accumulated net losses from Inception (December 19, 2014) through
the period ended March 31, 2021 of $14,250,134. Due to our negative cash flow, the Company has substantial doubt about the entity’s
ability to continue as a going concern within one year after the date that the financial statements are issued. In addition, the
Company’s development activities since inception have been financially sustained through equity financing. Management plans
to keep seeking funding through debt and equity financing which are intended to mitigate the conditions that have raise substantial
doubt about the entity’s ability to continue as a going concern.
HEALTHY EXTRACTS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2021 and 2020
NOTE 4 – RELATED PARTY
For the months ended March 31, 2021 and
2020, the Company had expenses totaling $18,000 and $0 respectively, to an officer and director for salaries, which is included
in general and administrative expenses on the accompanying statement of operations As of March 31, 2021, there was a total of convertible
debt of $0.00 and accrued interest payable of $0.00 due to an officer and director, employees, and shareholders.
NOTE 5 – CONVERTIBLE DEBT –
RELATED PARTY
In 2020, the Company converted the outstanding
convertible debt which was due to a related party.
NOTE 6 – NOTES PAYABLE
As of March 31, 2021, the Company had the following:
Unsecured debt with shareholders of the Company, no due date, 0% interest,
|
|
|
866
|
|
Unsecured debt with shareholders of the Company, no due date, 8% interest,
|
|
|
170,000
|
|
|
|
|
|
|
TOTAL
|
|
$
|
170,866
|
|
As of March 31, 2021, the Company has an outstanding total
of $3,917.78 in interest accrued for the above note.
NOTE 7 – CONVERTIBLE DEBT
As of March 31, 2021, the Company had the following:
Unsecured convertible debt, due 01/19/17, 8% interest, default interest at 18%, converts at a 54% discount to market price based on the lowest trading prices in the last 20 days trading price
|
|
|
6,750
|
|
Unsecured convertible debt, due 03/17/22, 10% interest, default interest at 16%, converts at $0.05/share.
|
|
|
340,000
|
|
|
|
|
|
|
SUBTOTAL
|
|
|
346,750
|
|
Less: Discount
|
|
|
—
|
|
TOTAL
|
|
$
|
346,750
|
|
Below represent the Black-Scholes Option Pricing Model calculations
for the above convertible note payables:
Payee
|
|
Number of options valued
|
|
Value of Convertible Option
|
Unsecured Convertible debt #1
|
|
|
229,751
|
|
|
$
|
8,894
|
|
Unsecured Convertible debt #2
|
|
|
11,220,000
|
|
|
$
|
689,088
|
|
HEALTHY EXTRACTS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2021 and 2020
NOTE 7 – CONVERTIBLE DEBT (CONTINUED)
As of March 31, 2021, the Company has
an outstanding total of $3,742 in accrued interest for the above convertible notes.
The convertible promissory notes #1 is
in default but management has not been able to make contact with this party, due to them living out of the country. We have calculated
the derivative liability as if it is in default (but the note’s default interest rate stays the same at 8%) and will still
accrue appropriate interest until the note is fully satisfied or converted into the Company’s common stock.
The Company has determined that the conversion
feature embedded in the notes referred to above that contain a potential variable conversion amount constitutes a derivative which
has been bifurcated from the note and recorded as a derivative liability, with a corresponding discount recorded to the associated
debt.
NOTE 8 – STOCKHOLDERS’ EQUITY
Authorized Stock
The Company has authorized 75,000,000
common shares with a par value of $0.001 per share. Each common share entitles the holder to one vote on any matter on which
action of the stockholders of the corporation is sought. During February 2017, the Company increased the authorized number of shares
to 500,000,000. Also, the Company increased the authorized preferred stock to 75,000,000 shares and designated 25,000,000 shares
of preferred stock to Series A Convertible Preferred Stock. During January 2018, the Company increased its authorized number of
common shares to 1,000,000,000. During April 2018, the Company increased its authorized number of common shares to 2,500,000,000.
The Board of Directors, in the future, has the authority to increase the authorized capital up to 4,000,000,000 shares based on
shareholder approval.
The shareholders of the Company approved
a reverse stock split at a ratio of between 1-for-100 and 1-for 250. The Company received approval from FINRA for a reverse stock
split of 1-for-250, which was effective as of July 23, 2018.
On October 16, 2017, the Company filed
an Amended and Restated Certificate of Designation of the Rights, Preferences, Privileges and Restrictions of the Series A Convertible
Preferred Stock (the “Amended Certificate”) with the Secretary of State of the State of Nevada. The Amended Certificate
reduces the number of preferred shares designated as Series A Preferred Stock from 25,000,000 shares to 1,333,334 shares. The Amended
Certificate also changes the conversion and voting rights of the Series A Preferred Stock. The Series A Preferred Stock is now
convertible into the number of shares of our common stock equal to 0.00006% of our outstanding common stock upon conversion. The
voting rights of the Series A Preferred Stock are now equal to the number of shares of common stock into which the Series A Preferred
Stock may convert.
As of March 31, 2021, there are no outstanding
shares of preferred stock. All the preferred stock was converted in common stock on February 4, 2019. See recent developments for
details.
HEALTHY EXTRACTS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2021 and 2020
NOTE 8 – STOCKHOLDERS’ EQUITY (CONTINUED)
Common Share Issuances
During the year ended March 31, 2021,
the Company issued 3,915,000 shares of common stock. On March 18, 2021, the Company raised $340,000 note payable agreement which
1,200,000 shares of the Company’s common stock were issued to the note holder. Additionally, 2,000,000 shares of common stock
were issued to a company helping secure the note. Finally, 715,000 shares of common stock were issued for marketing services.
During the year ended December 31, 2020,
the Company issued 41,727,651 shares of common stock. On several dates in September 2020, the Company raised $295,000 in direct
security purchase agreement which equal to 5,900,000 shares of the Company’s common stock. During the fourth quarter of 2020,
the Company raised $155,000 in direct security purchase agreement which equal to 3,100,000 shares of the Company’s common
stock.
Warrant Issuances
In December 2020, the Company issued 7,500,000
warrants to three individuals at $0.05 per share. These warrants will need to be exercised between the date of issue and three
years thereafter. As of March 31, 2021, there were 7,512,000 warrants outstanding, of which 4,000 warrants are fully vested.
Stock Issued for Services
On January 28, 2019, the Company entered
into a marketing and sales consulting agreement with an individual for a period of six months. The Company issued 350,000 shares
of common stock as the compensation for this agreement. On March 18, 2021, the Company entered into a marketing consulting agreement
with an individual. The Company issued 715,000 shares of common stock as the compensation for this agreement.
Share Conversion Agreements
All of the holders of the Company’s
Series A Convertible Preferred Stock (the “Preferred Holders”) entered into a Preferred Stock Conversion Agreement.
Pursuant to the Conversion Agreements, the Preferred Holders converted their shares of preferred stock into common stock, effective
as of the Exchange. As a result, no shares of the Company’s Series A Convertible Preferred Stock are outstanding. An aggregate
of 15,592,986 shares of common stock were issued to the Preferred Holders. The Preferred Holders agreed to convert each share of
Series A Convertible Preferred Stock into eighteen (18) shares of common stock and agreed to retire a total of 467,057 shares of
Series A Convertible Preferred Stock. The Company cancelled the retired shares.
Omnibus Stock Grant and Option Plan
On May 30, 2020, the Company proposed
a stock options agreement in the amount of 10,550,000 shares with a strike price of $0.05 to sixteen individuals. This plan was
approved by the Company by the end of the third quarter 2020. Purchase price under the plan is defined as: unless otherwise permitted
by applicable law, the purchase price of Shares to be offered under the Plan shall not be less than eighty-five percent (85%) of
the Fair Market Value of a Share on the date of grant (100% for 10% shareholders).
HEALTHY EXTRACTS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2021 and 2020
NOTE 9 – ACQUISITIONS
Acquisition of Ultimate Brain Nutrients,
LLC
On April 3, 2020, the Company entered
into a Share Exchange Agreement by and among Grey Cloak Tech Inc., Ultimate Brain Nutrients, LLC, a Delaware limited liability
company (“UBN”), and the members of UBN, whereby we issued and exchanged 90,000,960 shares of our common stock
for all of the outstanding equity securities of UBN. UBN is now our wholly-owned subsidiary. The shares of common stock issued
in the Exchange are equal to approximately 42.5% of our outstanding common stock immediately following the exchange.
The assets acquired and
liabilities assumed as part of our acquisition were recognized at their fair values as of the effective acquisition date, April
3, 2020. The following table summarizes the fair values assigned to the assets acquired and liabilities assumed.
Cash
|
|
$
|
(5,466
|
)
|
Current assets
|
|
|
315,604
|
|
Current liabilities
|
|
|
0
|
|
Net assets acquired
|
|
$
|
310,137
|
|
The purchase price method
was used when calculating the fair market value of the UBN purchase. On April 3, 2020 the closing stock price for GRCK was $0.021.
The total number of shares exchanged multiplied by the closing stock price equaled a purchase value of $1,890,020. The difference
between the net assets acquired and the purchase value was recorded as $1,579,883 of goodwill for the purchase. Due to the goodwill
impairment, the Company fully expensed the goodwill recorded in this transaction. The Company viewed UBN’s balance sheet
as being fairly valued as of April 3, 2020 so no adjustment was needed under the purchase price method of valuation.
NOTE 10 – BUSINESS SEGMENT INFORMATION
As of
March 31, 2021, the Company operated in two reportable segments (Corporate and Health Supplements) supported by a corporate group
which conducts activities that are non-segment specific. The following table presents selected financial information about the
Company’s reportable segments for the Months ended March 31, 2021.
|
|
CONSOLIDATED
|
|
HEALTH SUPPLEMENTS
|
|
CORPORATE
|
|
|
|
|
BergaMet
|
|
UBN
|
|
|
Revenue
|
|
|
170,433
|
|
|
|
170,433
|
|
|
|
—
|
|
|
|
—
|
|
Cost of Revenue
|
|
|
41,442
|
|
|
|
41,442
|
|
|
|
—
|
|
|
|
—
|
|
Long-lived Assets
|
|
|
657,025
|
|
|
|
201,298
|
|
|
|
455,727
|
|
|
|
—
|
|
Gain (Loss) Before Income Tax
|
|
|
(1,293,636
|
)
|
|
|
(154,452
|
)
|
|
|
(36,492
|
)
|
|
|
(1,102,692
|
)
|
Identifiable Assets
|
|
|
2,479,644
|
|
|
|
2,479,644
|
|
|
|
—
|
|
|
|
—
|
|
Depreciation and Amortization
|
|
|
1,275
|
|
|
|
1,275
|
|
|
|
—
|
|
|
|
—
|
|
HEALTHY EXTRACTS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2021 and 2020
NOTE 11 – SUBSEQUENT EVENTS
Offering Circular
During the first part of the 2021, the
Company is in the process of filing a Regulation A with the U.S. Securities and Exchange Commission. We see this filing going through
final approval in the month of May 2021.
COVID-19
On March 11, 2020, the World Health Organization
declared the novel strain of coronavirus (COVID-19) a global pandemic and recommended containment and mitigation measures worldwide.
The Company is monitoring this closely, and although operations have not been materially affected by the coronavirus outbreak to
date, the ultimate severity of the outbreak is uncertain. Further the uncertain nature of its spread globally may impact our business
operations resulting from quarantines of employees, customers, and third-party service providers. At this time, the Company is
unable to estimate the impact of this event on its operations.
The Company evaluated its March 31, 2021
financial statements for subsequent events through May 3, 2021, the date the financial statements were available to be issued.